Lunde v. Town of Slater

Decision Date11 March 1919
Docket NumberNo. 32665.,32665.
Citation171 N.W. 5,185 Iowa 605
PartiesLUNDE v. TOWN OF SLATER.
CourtIowa Supreme Court

OPINION TEXT STARTS HERE

Appeal from District Court, Story County; E. M. McCall, Judge.

This case involves an appeal from the action of the town council of defendant town, sitting as a board of review, in raising the assessment for moneys and credits against appellee $25,000 on account of a contract which appellee says was an option contract, and not properly assessable as moneys and credits, but which appellant contends is a contract of sale for the sale of real estate, and has been so treated by the parties, and is properly assessable, and that the contract was drawn for the purpose of evading taxation. The district court held that the instrument was an option contract, and not, therefore, assessable, and accordingly reduced plaintiff's assessment in the amount that he had been assessed thereon. The defendant appeals. Affirmed.Bert B. Welty, of Nevada, Iowa, for appellant.

Lee, Garfield & Coyle, of Ames, for appellee.

PRESTON, J.

[1] 1. Appellant says that the only question is as to whether under the law, the instrument in question was such an instrument as being subject to taxation. Appellee cites a number of authorities to the proposition that an option contract is not assessable, and appellant concedes in argument that, if the contract in question is an option contract, then it is not assessable. The contract, executed March 1, 1915, between H. E. Lunde and wife, first parties, and J. E. Sheldahl, second party, is quite lengthy, and we do not deem it necessary to set out all of it. So much thereof as appears to be material is that--

“First parties agree to sell to the party of the second part * * * an option to purchase certain described real estate, consisting of about 158 acres. In case such option is exercised on the part of second party, he will pay $31,500. Second party will pay first parties $4,500 on the execution of this agreement, the receipt whereof is acknowledged. Second party is hereby placed in possession of said premises, and shall have the use and benefit thereof, and shall pay to the first parties the further sum of $27,000 on or before March, 1920. The second party shall have the entire period of the term of this contract in which to make his election to exercise the right to purchase the said land, and in case he should at any time elect not to conclude the purchase of same, he may remove from the said premises, and give up possession thereof to first parties, and shall be held to forfeit all payments made by him on this contract as rent for said premises. If any default is made in any part of the payments or agreements mentioned, second party shall have no claim in law or equity against the other, nor to the above-mentioned real estate. If the consideration is paid promptly, at the time or times agreed upon, first parties will, on receiving the said sums of money, as provided in the contract, execute and deliver a good and sufficient warranty deed of said premises to second party.”

The evidence bearing upon the questions involved, including the intention of the parties, is, briefly, that plaintiff is the father-in-law of Sheldahl. Sheldahl has tilled the farm and kept up the fences since the contract was made, and has paid $500 additional, and interest, and has occupied and managed the farm and paid the taxes. The reason given by plaintiff for making the contract was that he was tired of farming. It further appears that plaintiff told the person who drew the contract what the arrangement was, and that the contract was drawn pursuant thereto; that plaintiff was going to give Sheldahl an opportunity to go on the farm, with the privilege of buying it in the future; that, after the details had been stated to witness, he says that the only thing he could figure out of it was an option; and that he drew the option contract accordingly. Plaintiff testifies that Sheldahl has never at any time exercised the right to buy this land, or agreed to buy it and pay for it; that there is no other contract or arrangement but the one set out; that he intended that his son-in-law should have the right to take the farm or not take it at any time within five years; he intended to give him a chance to do that; he never understood he could hold him to pay the purchase price, unless he elected to buy the farm; that he could not get the money unless Sheldahl took the land. Sheldahl testifies that there was no other agreement or arrangement than the written contract, and that he has never elected to buy the farm; that he has until 1920 to do so; that he paid the $500 in addition to the amount due as rent, and that he could apply this on rent if he wished to, and that such was the understanding when he paid it; that he has to pay the $27,000 if he exercises a right to get a deed. As said, appellant concedes that, if the contract in question is an option contract, it is not assessable. This being so, it leaves the sole question as to whether or not it is an option contract.

[2] Appellant's first objection is that the word “option” is used, and that it is thrown in for the purpose, as it contends, of having the contract found to be nonassessable. Their next...

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